Authors
Carmen Arguedas, Francisco Cabo, Guiomar Martín-Herrán
Publication date
2020/3/1
Journal
Journal of Environmental Economics and Management
Volume
100
Pages
102297
Publisher
Academic Press
Description
We analyze optimal pollution standards and enforcement strategies in settings where environmental damages depend on accumulated pollution, and enforcement is socially costly. We assume that a regulator and a representative polluting firm interact in a Stackelberg differential game, and we specifically allow the firm to pollute above the limit, and pay the corresponding fine. A crucial element is how progressive the fine is with respect to the degree of non-compliance. Some of our results contradict the related literature on the control of stock pollutants under full-compliance. In particular, we find that setting standards dependent on the pollution stock (setting quantities) is preferred if fines are sufficiently non-linear; while setting fines dependent on the pollution stock (setting prices) is preferred if fines are linear or almost linear, and specially when the environmental problem is particularly harmful.
Total citations
2020202120222023202412433
Scholar articles
C Arguedas, F Cabo, G Martín-Herrán - Journal of Environmental Economics and Management, 2020